NSE Revises Lot Sizes for Key Index Derivatives Starting November 2024

With effect from November 20, the National Stock Exchange (NSE) changed the lot size of five futures and options (F&O) segments on October 18. The NSE said in a circular that the lot size of Bank Nifty has raised to 30 from 15 and that the lot size of Nifty has been changed to 75 from 25. The lot size of Midcap Nifty has raised to 120 from 50, while the lot size of Fin Nifty has been changed to 65 from 25. According to NSE, the lot size for the Nifty Next 50 has been raised from 10 to 25.

(Effective Date: The revised lot sizes will apply to all new index derivatives contracts (weekly, monthly, quarterly, and half-yearly) introduced from November 20, 2024 onwards.)

According to the NSE, the legislation will take effect for all new index derivatives contracts (weekly, monthly, quarterly, and half-yearly) that are offered starting on November 20, 2024. 

When an index derivative contract is first introduced to the market, it must be worth at least Rs 15 lakh. According to the stock market, the lot size must also be determined so that the derivative's contract value on the day of review is between Rs. 15 lakh and Rs. 20 lakh.

Also read What are Futures and Options

"The existing weekly and monthly expiry contracts will continue with the existing lot size till its respective expiry date. In case of quarterly and half yearly existing expiry contracts, the same shall be transitioned to the new lot size on December 24, 2024, end of the day for BANKNIFTY and December 26, 2024, end of the day for NIFTY," NSE further said.

Earlier Lot Size

After the Securities and Exchange Board of India (SEBI) established stricter regulations for equity derivatives earlier this month, the National Stock Exchange (NSE) declared it will keep weekly derivative contracts tied to the benchmark Nifty 50 index. The action comes in response to a directive from SEBI compelling exchanges to reduce the quantity of weekly options contracts offered to investors to one starting on November 20.

The government and the regulator saw the recent surge in retail investor options trading as a risk to household finances, therefore they implemented new regulations to rein in this activity. The other three weekly options connected to Bank Nifty, Nifty Financial Services, and Nifty Mid-Cap will no longer be offered, according to the NSE.

Additionally, BSE said that it will only keep weekly derivative contracts connected to its benchmark BSE Sensex, an indicator of 30 bluechip companies, and will stop offering futures linked to Bankex and Sensex 50. According to a SEBI analysis, in the three years leading up to March 2024, individual traders lost a net of Rs 1.81 lakh crore on futures and options, with just 7.2% of them turning a profit.

To Summarize

Starting November 20, 2024, the National Stock Exchange (NSE) will revise the lot sizes for five major futures and options (F&O) index derivatives. The changes include an increase in lot sizes for Nifty 50 (from 25 to 75), Bank Nifty (from 15 to 30), Nifty Financial Services (from 25 to 65), Nifty Midcap Select (from 50 to 120), and Nifty Next 50 (from 10 to 25).